Oil: Losses extended on US supply

NEW YORK - Oil extended losses today after Opec agreed to pump crude near full rates and as supplies in the United States, the world's top energy consumer, were near seven-year highs.

The Organisation of the Petroleum Exporting Countries, which pumps a third of the world's crude, agreed on Wednesday not to change its 28 million barrel per day (bpd) production ceiling.

The decision came just before the US government reported on Wednesday that crude stocks had risen last week to the highest level in nearly seven years, and to a 10 per cent surplus over last year.

"The fundamentals across most of the complex are so bearish that on any given day you're either going to need to a lead from petrol or some bullish geopolitical headlines to give this market a rally," said Jim Ritterbusch, president of Ritterbusch and Associates in Illinois. "Otherwise it's just going to sink."

US light crude for April CLc1 settled 51 cents weaker US$59.96 a barrel, capping a week in which the contract fell nearly 6 per cent.

London Brent crude LCOc1 settled 23 cents lower at US$60.83 a barrel.

US petrol supplies were above the five-year average, the government reported this week, but futures for the fuel are volatile on concerns that the surplus will erode as the US driving season looms and as refiners are only starting to emerge from unusually heavy winter work.

Oil had been supported by US petrol futures HUc1 yesterday, but the fuel settled 3.20 cents lower at nearly US$1.69 a gallon on today.

Further violence in Nigeria limited losses. Nigerian militants killed four soldiers and a policeman in an aborted attempt to capture a fuel tanker in the southern delta, officials said on Thursday, the latest in a series of attacks that have cut exports from the Opec member by a fifth.

And traders are concerned that a deal between Iran and the West over its nuclear programme appears no closer. A hard-line Iranian cleric told a Friday prayers congregation in Tehran that US President George W. Bush was using the nuclear issue to further his goal of overthrowing the Islamic Republic.

Bush on Friday called Iran a "grave national security concern," but said he sought a diplomatic way to cap its nuclear goals.

The United States said Iran would be a major threat to US Middle East interests if it acquired atomic bombs, though Iran says its nuclear programme is for civilian use. Traders fear any sanctions could see Iran retaliate by cutting oil exports.

Production in Ecuador edged up on Thursday after soldiers seized oil installations to quash a workers' strike, but state firm Petroecuador said it could take at least two months to fully restore output from 110,000 bpd to its normal 200,000 bpd.

- REUTERS